As it heads into the second half of 2008, the Manitoba economy definitely has a lot of momentum.

In July, full-time employment in the province grew by 3.5% year over year, which helped to push the province’s unemployment rate to a record-low 3.8%. At the same time, Manitoba’s employment rate reached 67%, just shy of the record high (67.4%) that it reached in April of this year.

From an industrial perspective, both the goods and services sectors have contributed to the province’s strong employment picture. However, the construction sector has been by far the major source of Manitoba’s new jobs, accounting for 52% of the net increase in employment over the past 12 months.

Other sectors that helped boost employment in the province include management and business services (+23% year over year) , health services (+7.7%) and utilities (+ 38%).

This strong pattern of full-time employment growth, when combined with solid growth of weekly earnings, has contributed to strong growth of consumer spending, too. Year to date, retail sales in the province are up 10.6%, a level second only to neighbouring Saskatchewan and almost twice the 5.5% growth rate for the country as a whole.

Looking forward, although the effects of the weak U.S. economy will continue to put a drag on the Manitoba economy into 2009, the province should continue to benefit from sustained growth of non-residential construction. In particular, the development of the Wuskwatim Hydro Generation Project, the expansion of the Vale-Inco Mine in Thompson and the Red River Floodway Expansion will benefit the province.

In addition to investment, consumer spending in the province should be supported by three factors: (1) recent strong growth of full-time employment; (2) effects of a recent easing in oil and energy prices; and (3) lower interest rates. Finally, although residential construction in the province is likely to slow, a strong job market should keep housing demand solid throughout the remainder of 2008 and well into 2009.

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